If your home needs some sprucing up or you’re considering a major renovation, there are lots of loans for home improvement that can help. But the right loan for you will depend on your personal finances and the specific project in question, so it’s important to understand the various options.

Which loan is best for home renovation?

Loans for home improvement are generally used to pay for a variety of projects aimed at improving the quality and value of a house. These may include essential repairs or more ambitious upgrades, like a new kitchen or a master suite. The funds can be used to improve a property that’s for sale or for a primary residence that will eventually become a rental.

The specifics of each loan for home improvement vary by lender and type, but borrowers can usually expect to borrow money at an interest rate that’s based on their credit score, income and debt-to-income ratio. A loan’s interest rate can make or break the overall cost of the project.

Some types of home improvement loans are unsecured, and some don’t require homeowners to put up their homes as collateral against the debt. These include personal loans and credit cards. Personal loans, in particular, can be a good choice for people who don’t have much equity built up in their houses but still want to avoid using their mortgages as collateral.

Another option is a HELOC, which is similar to a second mortgage but offers a line of credit that can be tapped as needed rather than in one lump sum. However, these types of home improvement loans tend to have higher rates than other options.